Vietnam Today

SMEs crying out for capital

ADB report notes Asian SMEs require the necessary funding and support to take part in global supply chains.

by Linh San

Asia’s small and medium-sized enterprises (SMEs) need finance to help them grow into dynamic, internationally-competitive companies, according to a new report from the Asian Development Bank (ADB).

The Asia SME Finance Monitor 2014, which assesses 20 countries in developing Asia, noted that SMEs make up an average of 96 per cent of all registered companies and employ 62 per cent of the workforce. They contribute, however, only 42 per cent of economic output.

Vietnam had a total 359,794 micro, small, and medium-sized enterprises (MSMEs) as at the end of 2013, accounting for 96.4 per cent of all enterprises in the country. Most of these were privately owned (97.2 per cent) while foreign-invested enterprises accounted for 2.7 per cent and the remainder were State-owned.

“Asia has millions of SMEs but few are able to grow to the point where they can innovate or be part of the global supply chain,” said Mr. Noritaka Akamatsu, Senior Advisor in ADB’s Sustainable Development and Climate Change Department, which authored the report. “To do this they need more growth capital and opportunities to access various financing channels.”

Governments in the region need to assist SMEs become more competitive and able to participate in global value chains. This includes governments making it easier for SMEs to access new financing, such as supply chain finance.